Overall net profit fell 38.5% year-on-year during the period to hit €7.28 billion (US$8.54 billion).

“Higher-sales of lower-margin electric vehicles (EVs) as well as restructuring costs hit the result in addition to the tariffs,” Volkswagen said.

Finance chief Arno Antlitz said Volkswagen was nevertheless “on the right track” and that performance was at the “upper end of expectations”, if tariffs and restructuring costs are excluded.

The firm struck an unprecedented deal with unions last December to cut 35,000 jobs in Germany by 2030 as part of plans to save €15 billion a year.

The 10-brand group also cut its revenue and profit outlook, warning of “political uncertainty and increased barriers to trade” for the remainder of the year.

It now forecasts a profit margin for the year of between 4% and 5%, down from 5.5% to 6.5% previously, amounting to billions of euros for the firm.

“The range assumes that the US will continue to levy tariffs of 10% on imported cars in the best case and stick to its current rate of 27.5% in the worst,” Volkswagen said.

Volkswagen’s previous guidance, released in April shortly after new US tariffs took effect, did not take the increased duties into account.

“Sales by volume in North America fell 16% ‘mainly due to tariffs’ in the first half even as they rose slightly worldwide,” Volkswagen said.

Trump in April slapped an additional 25% levy on imported cars as part of an aggressive trade policy he says will help boost US manufacturing.

That has hit European carmakers. French group Stellantis – whose brands include Jeep, Citroen and Fiat – said on Monday that North American vehicle sales by volume plunged 25% in the second quarter of the year.

US and EU diplomats are currently negotiating ahead of the latest deadline set by Trump, with Trump threatening a blanket duty of 30% after Aug 1 if no agreement is reached.